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Flagged by TurboTax for High audit risk because of lower side business income, small business loss, and educational expenses.

I just finished my TurboTax form and the program flagged my tax return as being a high audit risk because:

* My side gig had significantly lower income this year. That's because I cut back on the side businesses because my W-2 job took much more of my time (currently working between 50-75 hours per week). As of this year (2024), I intend to stop the side gigs altogether, as they only made around $500 last year, compared to several thousand in prior years. Again, it's because I am working way more hours at my main W-2 job.

 

* I also had a small loss at one of the side jobs becase I spent more  on business expenses than I made (those expenses included a monthly Quickbooks subscription which tracks my miles and expenses. It's a holdover from the previous year.)

* My educational expenses were high, but the two schools that I attend part-time charges a lot per credit hour, and it's on the quarter system.

 

In light of the audit risk, I plan on paying for Turbotax audit defense. I think it is worth it and I can afford it because I am getting back over $1500 from my returns.

 

Does this sound like a good strategy?

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1 Reply
KristinaK
Employee Tax Expert

Flagged by TurboTax for High audit risk because of lower side business income, small business loss, and educational expenses.

It's an excellent approach that is enhanced by your responsible way of treating your business when you keep track of your income and expenses. Remember to save your receipts and bank/credit card statements as well. 

 

 

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